ConocoPhillips to sign deal on Amborip VI block

Leony Aurora, The Jakarta Post/Jakarta

U.S. energy giant ConocoPhillips will sign a contract to explore and develop Amborip VI oil and gas block in the Arafura sea in Papua in early December, a government official says.

All the technical problems encountered for the block, offered through a direct-offer mechanism, have been solved, Ministry of Energy and Mineral Resources' director of exploration and production Novian M. Thaib said on Friday, without elaboration.

"We plan to sign the contract early next month," he said.

The government signed contracts with eight other tender winners of directly offered blocks in early October. ConocoPhillips was the only company whose contract signing was postponed.

According to the ministry's data, ConocoPhillips will get 35 percent of all oil produced in Amborip VI and 40 percent of gas output, after tax. The company has made a commitment to spend US$1.5 million on geological study and to drill two wildcat wells, as well as awarded a signing bonus of $1.25 million.

The government will also announce the winners for 14 oil and gas blocks -- that were offered through regular tender in the first round of bidding in July -- in December, Novian said.

Next month, the government will also open the second round of bidding with 18 blocks, mostly onshore, offered through the direct-offer mechanism.

Ten more blocks, including ones in the Strait of Malacca, Natuna Sea and the eastern part of Indonesia, will be presented through a regular tender, Novian said.

To attract more investors, the government has scrapped value- added taxes and import duties for all capital goods during exploration and exploitation periods.

It also raises the split offered to contractors from the usual 15 percent for oil to between 20 percent and 35 percent for fields in remote areas.